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Product safety and recall issues - a European perspective

Each year, a number of high profile product safety issues are reported in the media, often leading to serious reputational issues for the brand concerned.

Of relevance, there have been a number of recalls of Japanese products – electrical and automotive – over the last 12 to 18 months.

In this article, we provide an overview of the key European Regulatory provisions as applied under UK law, and explain some of the main product safety and product recall issues that arise in a practical context.

The General Framework

The regulatory regime that imposes criminal liability on producers and distributors of unsafe products in the UK is primarily set out in the General Product Safety Regulations 2005 ("GPSR"). The GPSR give effect to the European General Product Safety Directive (2001/95/EC) and apply to all products except to the extent that they are subject to sector-specific regulations. Where the sector-specific regime does not include an equivalent provision, then the GPSR still applies. The GPSR imposes broad safety requirements backed up by criminal sanctions.

The European General Product Safety Directive is shortly to be repealed and replaced with a new Regulation on Consumer Product Safety. The most important features of the existing UK regime (as set out below) are likely to remain after this is enacted but there will be some additional requirements including clearer rules for marking products to assist in any recall.

The General Product Safety Regulations 2005

General Safety Requirement

Producers

The core requirement under the GPSR is that producers must not place any product on the market unless it is a safe product (Regulation 5). A safe product is defined broadly in Regulation 2 as one which, under normal or reasonably foreseeable conditions of use, does not present any risk or only the minimum risk compatible with the product's use.

There is a presumption that the general safety requirement is met where the product conforms to either (i) any applicable specific health and safety requirements laid down by UK law; or (ii) a voluntary national standard which gives effect to a European standard (reference to which has been published in the Official Journal of the European Union). For certain types of products (including electronic goods), the producer is required to certify conformance with the relevant EU level safety standards by displaying the 'CE mark' on the product (or, if that is not practical, on its packaging).

Under the GPSR, the very fact of placing an unsafe product on the market is itself a criminal offence. It is an offence of strict liability subject only to the defence of due diligence, which is discussed below. The maximum penalty is a fine not exceeding £20,000 or imprisonment for a term not exceeding 12 months or both.

The relevant prosecuting authority will always have discretion whether or not to prosecute. Our experience is that the authority will normally choose not to prosecute where the producer is a reputable business and is seen to be taking responsible measures to address the risk created by the product. However, the fact that an offence will often already have been committed by the time the defect is discovered, provides the authority with a helpful enforcement tool should the producer not take what the authority considers to be the required remedial action, or fail to do so in the way the authority wishes it to, or within its desired timetable.

Distributors

The equivalent obligation placed upon a distributor is not to supply (or possess for supply or offer or agree to supply) a product that they know (or should have presumed on the basis of the information in their possession and as a professional) is a dangerous product.

The burden of proof to establish a distributor has committed an offence is higher than in relation to a producer since the prosecution is required to prove, to the criminal standard, knowledge or implied knowledge on the part of the distributor that the product was unsafe. The maximum penalty is the same as for a producer: a fine not exceeding £20,000 or imprisonment for a term not exceeding 12 months or both.

Duty to notify

One of the most difficult judgments to make in practice is when to notify the enforcement authority that a product is (or may be) unsafe. After a producer (or distributor) first becomes aware of a potential issue it will want to carry out tests, which can be time-consuming, to understand the nature and extent of the problem before deciding on a course of action. There may be some uncertainty as to whether or not the product is unsafe and, even if it clearly is, a producer will usually want to establish the risk it poses and, crucially, how many units of the product have been supplied, where and to whom. The most effective recalls in our experience are those in which the producer is able to supply the enforcement authorities with this relevant information and explain what steps it is taking.

Regulation 9, however, requires that once the producer or distributor knows that the product is unsafe they must notify the enforcement authority "forthwith". European Commission Guidelines interpret this to mean that notification should be made as soon as relevant information has become available and, in any event, (i) within 10 days; or (ii) immediately and not later than 3 calendar days where a serious risk is identified. The Guidelines are likely to receive judicial notice although they are not strictly binding. Under the new proposed Regulation, however, it is intended that this type of guidance will form part of the actual Regulations.

Failure to notify in accordance with Regulation 9 is a criminal offence. In our experience some latitude is given and the enforcement authorities tend to focus on ensuring proper steps are taken to counter the risk rather than on prosecuting companies for technical breaches. However, the position might be different if a consumer has been injured before the authorities are notified. In such circumstances the risk is that the matter will be viewed with the benefit of hindsight and it will be more difficult for the producer/distributor to show that they ought not to have known the product posed a risk. There is, therefore, always some risk in delaying notification.

Other obligations of producers

Criminal sanctions can also follow non-compliance with the following obligations placed upon producers under Regulation 7:

The obligation to provide consumers with the relevant information to enable them to assess the risks inherent in a product and to take precautions against those risks where such risks are not immediately obvious.

The requirement to adopt measures to enable a producer to be informed of the risks which a product might pose. For example by (i) marking the product or its packaging with the name and address of the producer and the product reference; and (ii) investigating and, if necessary, keeping a register of complaints concerning the safety of the product.

Under the new Regulation it will be a requirement that the product bears an indication of the country of origin (or on the packaging where it is not possible to mark the product) and producers/importers will be required to include their names and address at which they can be contacted.

Other obligations of distributors

Distributors are required under Regulation 8, within the limits of their activities, to participate in the monitoring of product safety by:

Passing on information on the risks posed by a product;

Keeping documentation necessary for tracing the origin of a product and producing it when required; and/or

Co-operating with the enforcement authority and/or the producer to avoid the risk posed by an unsafe product. Again, these obligations are reinforced by criminal sanctions.

A successful prosecution under Regulations 7 or 8 will result in a fine or imprisonment for a term not exceeding three months or both.

Safety notices

An enforcement authority has the power under the GPSR to serve upon a producer or distributor a variety of safety notices including:

Suspension notices (Regulation 11) which prevent the producer/distributor, for the period of the notice, from placing the product on the market or supplying it. This type of notice is appropriate where the authority needs time to organise its own safety evaluation of the product.

Requirements to mark or warn (Regulations 12 and 13). These notices are appropriate where the authority considers the product could pose risks in certain circumstances. The notices ensure the producer/distributor either marks on the product or provides warnings with the product.

Withdrawal notice (Regulation 14) which prohibits the producer/distributor from placing the product on the market or supplying it. This is an extreme step and will be taken only if an enforcement authority considers (i) that the product poses a serious risk (requiring urgent action); or (ii) that the action being taken by the producer/distributor to remedy the problem is insufficient.

Recall notices (Regulation 15) enable the enforcement authority to require a producer/distributor to recall a product. It is a power of last resort and may only be used where other action provided for under the Regulations would be insufficient. Unless the product poses a serious risk (requiring urgent action) a recall notice can only be issued if the action taken by the producer/distributor is unsatisfactory or insufficient and the authority has given not less than ten days' notice of the recall. It is very rare indeed for a recall notice to be imposed on a reputable business since they almost invariably recall dangerous products voluntarily at an early stage.

Contravention of any of these notices is a criminal offence with maximum penalties of a fine not exceeding £20,000 or imprisonment for a term not exceeding 12 months or both.

Defence of due diligence

In relation to each of the offences referred to above, it is a defence for the producer/distributor to show (on the balance of probabilities) that it took all reasonable steps and exercised all due diligence to avoid committing the offence.

Although the burden of proof is only to the civil standard of the balance of probabilities, in practice it is a difficult defence to establish because it requires the corporate entity not only to prove the existence of suitable systems and procedures (e.g. the existence of an inspection regime) but, in addition, that the corporate entity sought to ensure that the system was in practice followed correctly (i.e. both 'reasonable steps' and 'due diligence'). The size of the business and amount of risk associated with the product will be considered in order to determine what the reasonable steps are.

The prosecution of individuals

Regulation 31(2) provides that where a corporate entity is guilty of an offence under the Regulations then, in respect of any act or default which is shown to have been committed with the consent or connivance of, or to be attributable to any neglect on the part of any director, manager, secretary or other similar officer then that individual, as well as the corporate entity, shall be guilty of that offence and shall be liable to prosecution.

Although the wording of the section would appear to potentially include any number of people within a corporate entity holding different positions of seniority, case law has clarified that in most instances the prosecution against individuals will be limited to directors. In the case of R v Boal [1992] 2 WLR 890 the Court of Appeal held, in relation to a similar provision in the Health and Safety at Work etc. Act 1974, that the section was only aimed at those who are in "a position of real authority, the decision makers within the company who have both power and responsibility to decide corporate policy and strategy".

Powers of enforcement authority

The enforcement authority is usually the trading standards office of the local authority in the area where the defective product is first discovered. Trading Standards Officers are given wide powers under the GPSR to conduct investigations, including the power to enter premises and inspect any record or product or any procedure connected with the production of a product, provided it is not covered by legal privilege. In addition, they have the power to seize or detain samples of the product.

It is an offence to intentionally obstruct an officer in carrying out their duties, and is punishable with a fine.

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